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Breaking down the new MLS Collective Bargaining Agreement

We take a look at exactly what is included in the new MLS CBA.

MLS: Columbus Crew-Press Conference Greg Bartram-USA TODAY Sports

On Monday, nearly 40 days after Major League Soccer announced to the MLS Players’ Association that it would invoke its rights under the force majeure clause in the Collective Bargaining Agreement, the league and players announced that they have agreed to and ratified a new CBA.

If you feel like you’re having deja vu all over again it’s because you are. MLS and the MLSPA agreed to a new CBA just before the start of the 2020 season. Due to how close to the start of the season the deal was reached and then the timing of the COVID-19 pandemic, the CBA was not ratified before play was paused, so the league brought the players back to the negotiation table before a return to play in 2020 could be agreed to.

As part of those negotiations, the players agreed to a 7.5 percent pay cut for 2020, a cap on performance-related bonuses, a delayed roll-out of the revenue-sharing tied to the 2023 TV deal and a force majeure clause, albeit one not automatically triggered by attendance figures.

Force Majeure is a term in contract law that covers unforeseen circumstances that are totally out of the control of the contracting parties. These clauses allow one or both of the parties to walk away from the contract if something totally unforeseen (i.e. global economic collapse, war, a global pandemic) changes the expectations of contractual performance. In more simple terms, this clause allowed either MLS or the MLSPA to unilaterally tear up the CBA if the current COVID-19 pandemic continued into 2021 or another totally unforeseen event occurred.

As 2020 drew to a close and it became clear that COVID-19 would continue to drastically limit attendance, MLS informed the Players’ Association that it would invoke this clause, which would require players and the league to make “good faith” efforts to renegotiate the CBA.

A month and some change of public hemming-and-hawing later and both parties have agreed to a new CBA. Here are the most notable details from that new agreement.

No pay cuts for 2021

The players score a short-term win and will receive their full salaries and performance-related bonuses for 2021. This concession comes by MLS during a season in-stadium revenue will almost certainly be hit for a majority of the season. Additionally, the new bonus structure that was negotiated for the 2020 CBA is retained.

CBA extended through 2027

Conversely, the biggest win for the league is the extension of the expiration of the CBA from 2025 through 2027. This extension pushes the CBA expiration a full four years past the highly anticipated 2023 MLS TV rights deals and past the 2026 FIFA Men’s World Cup that will be hosted jointly between the United States, Mexico and Canada.

By ending the prior deal before the 2026 FIFA Men’s World Cup, the MLSPA put themselves in position to pressure the league into a more player-friendly deal in a year in which it was drastically important that a season happen. Now, the threat of no MLS games during a men’s World Cup year is gone and so is the player’s leverage.

Free agency shift

Before this new CBA, MLS players could not become a free agent within the league until they had reached the age of 24 and had accumulated five years of service in MLS. Beginning in 2026, MLS players who are at least 24 years old and have accumulated four years of service in MLS can become free agents. Free agents will also have the ability to negotiate more significant pay raises with new teams than the prior CBA allowed.

From MLS’s official announcement: “For players making the maximum salary budget charge or less, a free agent can sign a contract with another club with an initial salary of the greater of $25,000 above the maximum salary budget charge, or 20% above the player’s prior salary. For players making between the maximum salary budget charge and the maximum targeted allocation money (TAM) amount, the player could earn 20% above the prior salary up to $500,000 above the maximum salary budget charge and 15% of such salary from $500,000 above the maximum salary up to the maximum TAM amount.”

Salary cap, GAM and TAM

The league salary cap will remain at $4.9 million for 2021 and 2022 before slowly increasing to just over $7 million for the 2027 season. General Allocation Money, which can be spent on any player, is set at $1.5 million for 2021 and will slowly increase to just under $4 million for the 2027 season. Targeted Allocation Money, which can only be spent on specific roster acquisitions or player raises, begins 2021 at $2.8 million before slowly decreasing to $2 million in 2027.

MLS has provided a chart that documents the changes to player compensation during the term of the new CBA.

2021-2027 MLS Player Compensation

Year Salary Budget General Allocation Money Discretionary TAM Available Spend on Roster
Year Salary Budget General Allocation Money Discretionary TAM Available Spend on Roster
2021 $4,900,000 $1,525,000 $2,800,000 $9,225,000
2022 $4,900,000 $1,625,000 $2,800,000 $9,325,000
2023 $5,210,000 $1,900,000 $2,720,000 $9,830,000
2024 $5,470,000 $2,585,000 $2,400,000 $10,455,000
2025 $5,950,000 $2,930,000 $2,225,000 $11,105,000
2026 $6,425,000 $3,280,000 $2,125,000 $11,830,000
2027 $7,068,000 $3,921,000 $2,025,000 $13,013,000

The maximum budget charge for a single player, typically referred to as the Designated Players, threshold will increase yearly beginning in 2023. For 2021 and 2022, the maximum charge will be $612,500. In 2023 the maximum charge increases to $651,250; in 2024 the maximum charge increases to $683,750; in 2025 the maximum budget charge increases to $743,750; in 2026 the maximum budget charge increases to $803,125; and in 2027 the maximum budget charge increases again to $883,438.

The new under-22 player initiative, in which the league will encourage teams to sign talented players aged 22 or younger to contracts that carry a reduced budget charge, remains but the details are still not yet laid out. What we know so far is that each team will be able to sign up to three players under this initiative.

Revenue sharing

The revenue-sharing agreement that the players successfully won back in their February 2020 CBA negotiation remains but in a slightly different format. In the prior CBA, beginning in 2023, the league would increase player spending by 25 percent of media revenue that was greater than the 2022 league media revenue plus $100 million. The new CBA keeps revenue sharing but pushes back the 25 percent mark to 2025 with 2026 and 2027 also seeing revenue sharing at 25 percent. For 2023 and 2024, MLS will increase player spending by 12.5 percent of the media revenue laid out in the CBA

Keeping this revenue sharing is certainly a win for the players and could lead to increases in the salary cap within this CBA.

With the CBA buttoned-up, MLS will reportedly push back the start of the 2021 season. In the next few weeks, Crew fans can expect a schedule release and some more information from the league on the Under-22 player initiative.